Netflix Shares Soar As It Beats Wall Street’s Q4 Expectations

Shares are up 17+% in after hours trading after the streaming video company walloped analyst expectations for Q4. Netflix reported net income of $48.4M, +513% vs the same period last year, on revenues of $1.18B, +24.3%. The top line was ahead of forecasts for $1.17B. And earnings at 79 cents a share were well ahead of predictions for 65 cents. Another key metric, domestic streaming subscriptions, also came in strong at 33.4M vs forecasts for 33.2M. In a letter to shareholders, CEO Reed Hastings an CFO David Wells say that they expect to end Q1 with 48M. They say that they’re experimenting with subscription prices and hope to offer three options allowing for one, three, and four streams to run at the same time. “If we do make pricing changes for new members, existing members would get generous grandfathering of their existing plans and prices,” they say. “We are in no rush to implement such new member plans and are still researching the best way to proceed.” The execs attribute much of Netflix’ growth to “the tailwind of Internet video growth in general.” They add that the company is”relatively unaffected” by recent changes in the video streaming business including Verizon and Sony’s moves to create virtual pay TV services, the U.S. Supreme Court’s plan to rule on broadcasters’ suits against Aereo, and Charter’s bid for Time Warner Cable. But they are concerned about a federal appeals court decision to upend the FCC’s net neutrality rules. If a broadband provider seized the opportunity to charge Netflix to have its data transmitted at the fastest speeds, then the company would “vigorously protest and encourage our members to demand the open Internet they are paying their ISP to deliver.” They don’t believe that will happen because ISPs “are generally aware of the broad public support for net neutrality and don’t want to galvanize government action.”

It might be good to remember some recent history here. Yes, it’s $7.99 now… But, remember that 68% rate hike that Netflix inflicted on its customers? That was met with a s-storm that damn near drove the company into the proverbial toilet. If they try that scheme again, it might very well be “deja vu all over again.”